Timeframes, RSI

I cannot stress enough that it's important to not just use 1 timeframe, but to use a multiple of timeframes from macro to micro views. Sometimes people get so caught up in the minute details of where they are right now, but forget the big picture, then when something happens, they are totally baffled. Why did that happen? Is it because WalMart announced they missed earnings by 1 penny?

Come on, get real, is WalMart going to move the WHOLE S&P 500 with missing by 1 penny? I highly doubt it. Especially if you are at a major pivot point. Do you think it could be testing that pivot point, seeing if they can find more sellers, especially if they cannot bring in buyers?

Always be aware of the big picture. I go as far back to a monthly timeframe. Honestly, I find the monthly chart so incredibly beautiful, that to tell me the stock market is random is like saying the world is going to be invaded by aliens later this afternoon.

As I've said previously, which also bears repeating (can you tell that I'm a mommy?), the timeframes I use are 1, 3, 15, 60 minutes, daily and monthly. If I'm feeling really sharp and focused, I will trade off the 1 min. If I'm not quite all together there, I will use the 15 min. and maybe look for entries on the 3 min.

You have to know where you are mentally, and if the results you have are showing that you're not doing so well, then increase your timeframe. No point in giving back to the market due to pride. Chuck the pride.

Now that we have that settled, what am I looking for on the various timeframes?

1. Am I in overbought or oversold territory with RSI?
2. Am I nearing resistance or support on MACD?
3. What does the volume curve look like?
4. Where are the moving averages (in particular the 50 & 200 EMA)?

Each of those questions have different answers in the various timeframes. You may be in oversold RSI = 15 on the 1 min. but maybe near RSI = 35 on the 3 min. and RSI = 45 on the 15 min. What does this mean? It means to expect a pullback on RSI on the 1 min., but you still have further it could drop. So, get in short at the pullback (often this might look like the stock pulls back to the 10 or 20 EMA on the 1 min. chart), as this will give you a better price, and then watch it drop.

You can then, after it passes the point where some might consider a breakout, add to your position (legging into the trade). I don't prefer to do it this way, but you can. What this then does is pull RSI on the 3 and 15 min. lower (more on the 3 min. than 15 min.). You may find RSI = 15 on the 1 min. to be support. If you want to get out, you can, but if there is still room to move to the downside on the 3 and 15 min. and you don't want to be overtrading, then wait.

The 3 min. will get to oversold before the 15 min., which will still give you more room to the downside. BUT, you have to pay attention to wear support is on the 3 and 15 min. charts for RSI. Let's say in the very near past (like the past few hours), RSI 3 min. found support at 20 and it's at 20 now, you might not want to take a position to the downside, as it usually bounces from here and moves up, even if for a retracement.

Similarly if the 15 min. finds support at RSI = 25, then don't expect it to go to 15 as it did on the 1 min.

The inverse would be true for being in overbought territory.

This is only for RSI, but you can notice similar things in volume and MACD, and also price action. There are trends within trends within trends within trends.
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